Exhibit 10.03


 


PURCHASE AGREEMENT 


 


PURCHASE AGREEMENT
dated and effective as of July 31, 2020, by and among KORTH DIRECT MORTGAGE INC., a Florida corporation (“KDM”); J.W.
KORTH & COMPANY LIMITED PARTNERSHIP, a Michigan limited partnership (the “Partnership”); and JW KORTH
LLC, a Florida limited liability company (“General Partner”) (each a “Party” and collectively the “Parties.”)


 


WHEREAS, KDM
is a commercial mortgage lender and a Securities and Exchange Commission (“SEC”) reporting company engaged in
financing commercial loans through the offer and sale of its notes (the “Securities”) to qualified institutional buyers
and accredited investors; and


 


WHEREAS, the
Partnership is a broker-dealer and a financial advisor registered with the United States Securities and Exchange Commission (the
“SEC”) and a broker-dealer registered with the Financial Industry Regulatory Authority (“FINRA”); and


 


WHEREAS, KDM
offers its Securities through the Partnership as an underwriter, placement agent or initial purchaser; and


 


WHEREAS, KDM
has issued and outstanding 5,000,000 shares of common stock, which is KDM’s sole voting class of stock, all of which common
shares the Partnership owns of record and is accordingly the controlling shareholder of KDM; and


 


WHEREAS, the
General Partner is the sole general partner of the Partnership and the beneficial owner of 73.6% of the Partnership’s Common
Capital Interests, which is the sole class of Partnership voting interests; and


 


WHEREAS, the
Parties have determined that it is in the best interest of each Party that the Partnership and the General Partner be acquired
by, and become subsidiaries of, KDM; and


 


WHEREAS, The
parties desire to (i) make no changes in the management, clearing and bank accounts, staffing, and registrations of the Partnership;
and (ii) maintain the Partnership’s SEC registrations as a broker-dealer and investment advisor and FINRA registration a
broker-dealer.


 


NOW, THEREFORE,
in consideration of the representations, warranties and covenants herein contained, and for other good and valuable consideration,
the receipt, adequacy and sufficiency of which are hereby acknowledged, the Parties hereto, intending legally to be bound, agree
as follows:


 


1.       The
Acquisition. Upon and subject to the terms and conditions set forth in this Agreement, KDM shall acquire (i) the General Partner,
including but not limited to its 73.6% Common Capital Interest in the Partnership; all of Partnership’s Common Capital Interests
not held by the General Partner, and all of the Partnership’s Preferred Capital Interests for the consideration and subject
to the terms and conditions which follow.


 


2.       Distribution
of KDM Common Shares. On or before Closing, as hereinafter defined, the Partnership shall distribute all of its 5,000,000 shares
of the common stock of KDM to its Common Capital Interest partners pro rata in accordance with their relative Common Capital Interests,
as defined in the Partnership’s Limited Partnership Agreement dated February 20, 1990 (the “Limited Partnership Agreement”),
and pursuant to the Partnership Resolution annexed as Exhibit A to this Agreement.


 



    	 	Page 1 of 3	 



    	 



    




 


3.       Certain
Actions to be taken by KDM at Closing. At Closing, KDM shall (i) purchase all of the equity in the General Partner, JWK, LLC,
a Florida limited liability company, from its members, for consideration of (i) the payment to the Partnership’s Preferred
Capital Interest Partners of the amount of all dividends accrued and unpaid to the Preferred Capital Interest Partners calculated
at an annual rate of 6% through July 31, 2020, and (ii) pay to James Korth the sum of $150,000 as consideration for his interest
in the General Partner’s Common Capital Interest account.


4.       Certain
Actions to be taken by James Korth and Holly MacDonald-Korth at Closing. James Korth and Holly MacDonald-Korth shall sell and
assign their respective member interests in the General Partner to KDM.


 


5.       The
Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur by email or
other electronic means as of, and effective on, July 31, 2020, at 10:00 a.m. local time.


 


6.       Additional
Commitments of KDM. KDM agrees to take the following actions after Closing:


 


		a.	Retain James Korth as the Partnership’s Managing Partner, retain Holly MacDonald-Korth as
the Partnership’s Chief Financial Officer, and retain all other employees of the Partnership employed at Closing.



 


		b.	Operate the Partnership as a broker-dealer and investment advisor, and in accordance with the rules
and regulations of, and registered with, the SEC and FINRA.



 


		c.	Pay the quarterly dividends to the Preferred Capital Interest Partners each time as it pays the
dividends on its Series A Perpetual Convertible Preferred stock, but not less than annually.



 


		d.	Redeem annually 25% of the Preferred Partners’ Preferred Interests pro rata to each owner
of a Preferred Capital Interest, but only in such years as it pays dividends on its Series A Perpetual Convertible Preferred stock
and only through a contribution of capital to the Partnership.



 


		e.	Make a Discretionary Redemption of the accounts of all the Limited Partners pursuant to the Partnership’s
Limited Partnership Agreement.



 


7.       Additional
Actions. If at any time after Closing KDM shall consider or be advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in KDM,
its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either
the General Partner or the Partnership or (b) otherwise to carry out the purposes of this Agreement, KDM and its officers and directors
or their designees shall be authorized (to the fullest extent allowed under applicable law) to execute and deliver, in the name
and on behalf of either the Partnership or the General Partner, all such deeds, bills of sale, assignments and assurances and do,
in the name and on behalf of the Partnership or the General Partner, all such other acts and things necessary, desirable or proper
to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties
or assets of the Partnership and the General Partner, as applicable, and otherwise to carry out the purposes of this Agreement.


 



    	 	Page 2 of 3	 



    	 



    




 


8.       Managers
and Officers of the General Partner; Partnership Employees and Representatives. At all times after Closing (i) James W. Korth
shall remain the Managing Partner, and Holly MacDonald-Korth shall remain the Chief Financial Officer, of the General Partner of
the Partnership, and (ii) all representatives of the Partnership as of the date of Closing shall remain employed by the Partnership,
subject to such new hires or terminations as James W. Korth shall determine in his sole discretion.


 


9.       Matters
Concerning the SEC and FINRA; Certificate of Limited Partnership and the Limited Partnership Agreement of the Partnership.
At or prior to Closing, as it shall determine in its sole discretion the General Partner shall cause the Partnership to (i) notify
the SEC and FINRA of the transactions which are the subject of this Agreement and make such other regulatory filings as may be
necessary to cause the Partnership to continue as a duly licensed broker-dealer and investment advisor by all federal and state
agencies as may be necessary to continue the Partnership’s registrations as a broker-dealer and investment advisor, (ii)
make such state filings as may be necessary to continue the Partnership as a Michigan limited partnership and as otherwise may
be appropriate to effect and carry out fully the purposes of this Agreement.


 


10.       No
Change of Control of the Partnership, Prior to the acquisitions of the General Partner and the Partnership James Korth and
Holly MacDonald-Korth controlled 84% of the voting interests of the Partnership. After completion of the acquisitions, James Korth
and Holly MacDonald-Korth shall control 84% of the outstanding common shares of KDM, which shall initially control 74% of the voting
interests of the Partnership and, after the Discretionary Redemptions made under 6(e), above, 100% of the voting interests of the
Partnership.


 


11.       Separate
Signature Copies Valid. This agreement may be signed by each party on separate copies of this agreement and emailed to James
W. Korth at jwkorth@jwkorth.com to be valid.


 


In
Witness Whereof, the Parties have executed this Agreement as of July 31, 2020.


 


 


	 	/s/ James W. Korth
	 	James Wilder Korth, Managing Member of
	 	J. W. Korth LLC
	 	 
	 	/s/ James W. Korth
	 	James Wilder Korth, Managing Partner of
	 	J. W. Korth & Company Limited Partnership
	 	 
	 	/s/ James W. Korth
	 	James Wilder Korth, Chief Executive
	 	Officer of Korth Direct Mortgage Inc.
	 	 
	 	/s/ Holly MacDonald-Korth
	 	Holly MacDonald-Korth,  President of
	 	Korth Direct Mortgage Inc.


 


 


Page 3 of 3